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F1 Grand Prix Tax on Singapore Hotels

The comeback of Singapore’s Grand Prix last 2008, after almost 30 years of inactivity, boosted the tourism and economy of the city-state. After being stopped in 1974 because of people’s complaints and concerns regarding traffic jams, community noise and subsequent accidents in the races of 1972 and 1973, the Government of Singapore decided to co-fund the Race’s return with Singapore GP Pte Ltd, the Singapore Tourism Board and Bernie Ecclestone.

With its phenomenal return in September 2008, local hotels received an inflated number of occupancies and even experienced full booking during this season. Forecasts telling that it would boost Singapore’s tourism and hospitality industry proved to be true and accurate.

It was true that hotels in Singapore take pride in hosting this popular event annually. Christopher Khoo, MD of Master Consult Services, explained that the hotel industry would be the first to benefit from having an F1 Race in Singapore. Rooms would be fully booked and prices would be maintained high. Because of the large number of people coming and with rooms fully-occupied, other tourists might even go as far as taking rooms all the way to the neighbouring countries, like Malaysia, just to watch the race.

Associate Professor Prem Shamdasani of the National University of Singapore Business School further elaborated that events like the F1 Race are very expensive to organize. In order for Singapore to cope-up with the expenses, a cost-sharing approach was advised. A strong partnership between the private and public sectors could help ensure that this event would be well-prepared and well-staged. Thus, a special tax was imposed by the government to all hotels.

Minister of State for Trade and Industry, Mr. Iswaran explained that a special tax of not more than 30% would be imposed on hotel revenues for about seven days during this season aimed to help the Government settle the costs of hosting the race. This special tax was expected to raise an average of about $15 million to $20 million per year.

It was evident that not all in the industry were happy with the special tax imposed by the Government for this particular season. With this special tax, hotels admitted that an increase in price rates was their possible solution to cope-up with the new regulation. The Government, on the other hand, assured the hotel industry that they would provide consideration to the hotels. They understand the need of the businesses and commercial establishments to gain profit, but it is important not to forget their fair share to the nation.

Minister Iswaran further explained that they are merely asking for 30% percent in order to give the hotels a chance to profit from their sales and keep their share. Hotels nearer the race track and provide the best view of the race like those established in Marina Bay, would be paying the full 30% while those hotels positioned farther away, would pay less.

Experts say that an estimated 35,000 tourists are expected to arrive for the F1 event annually. And this outpouring will always call for a high demand of accommodations and will push for higher rates in hotels and airfares. A positive turn for the Singaporean economy is foreseen with the resurrection of the F1 Race. The tax imposed, though a bit heavy, for commercial industries would contribute to the boosting of the city-states economic recovery.



Source by Kelvin Kong

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